Debt claims misleading voters, says Cunliffe

A Labour government would raise the age of eligibility for NZ Super to 67 and resume contributions to the NZ Superannuation Fund. Photo / Mark Mitchell

National is trying to mislead voters by saying the net cost of Labour's policies including its savings package is almost $17 billion - a threefold exaggeration, says finance spokesman David Cunliffe.

National's Associate Finance Minister and election campaign manager Steven Joyce yesterday attacked Labour's savings package on the grounds it would increase the Government's net debt by almost $7 billion over the five years to 2015-16.

Labour wants to raise the age of eligibility for NZ Superannuation from 65 to 67, resume contributions to the NZ Superannuation Fund and make KiwiSaver compulsory for all workers.

The most financially significant of the three policies is the resumption of Superfund contributions which Mr Joyce said would add $6 billion to the Crown's net debt over four years.

"Labour wants to borrow billions more at precisely the time when the world is saying no to more debt."

However, Mr Cunliffe said the effect on the Government's books of resuming those contributions was neutral because money borrowed for that purpose was offset by the corresponding increase in the value of the fund.

"It has no impact whatsoever on net debt because net debt quite legitimately includes the increase in the Superfund ... If anything, it would reduce net debt because the rate of return is higher than the Crown's cost of capital.

"It's dishonest to focus on the liability and ignore the asset."

However, the measure of net debt currently used by the Treasury excludes the NZ Superfund. Under Labour the Superfund was included but National changed that when it ceased payments into it in what Mr Cunliffe said was a political move.

Hours before Labour announced its savings policy on Thursday, Mr Joyce released figures he said showed Labour's policies to date would result in $9 billion in extra borrowing over four years. Adding the cost of the savings package meant a Labour Government would have to borrow an additional $16.6 billion to fund its policies to date.

But Mr Cunliffe said Labour's additional net borrowing would be less than a third of that - "under $5 billion based on the policies we've announced so far".

Labour would release detailed costings of its policies within two weeks, he said.

Meanwhile, Labour's plan to lift the age of eligibility for NZ Super has found support from across the political spectrum. Act's youth affairs spokesman, Stephen Whittington, welcomed it as the adoption of his party's policy.

"Labour's flip-flop on this issue, while suspicious, is the right thing to do ... unless the retirement age is raised, young New Zealanders will be forced to pick up the tab in the future through higher taxation and more government debt."

While the Greens' current policy is to keep the age of eligibility at 65, co-leader Russel Norman said Labour's proposal for a "transition" payment at the same level as NZ Super for those aged between 65 and 67 who were unable to work addressed much of his party's concerns about the fairness of increasing the age.

New Zealand First leader Winston Peters was opposed to the idea, saying it was "a warning to the elderly of what's to come". He believed an eligibility age of 65 was sustainable if steps were taken to lift economic performance.

Grey Power national president Roy Reid said that while some of his members would have concerns about the proposal, overall "there wouldn't be too much complaint about it".

The Maori Party advocates lowering the age of entitlement to 60 years "for groups whose life expectancy is lower than average".